Trading Update

RNS Number : 6645I

Volex PLC

20 April 2022

 

20 April 2022

Volex plc

("Volex", the "Group" or the "Company")

Trading update

Volex plc (AIM:VLX), the global supplier of integrated manufacturing services and power products, provides the following update on trading ahead of the announcement of the Group's full year results for the 52 weeks ended 3 April 2022 ("the year"). 

Results ahead of expectations

Volex is pleased to confirm that the Group's revenues and underlying operating profits are expected to be ahead of consensus market expectations¹ for the year.

The Group expects, subject to finalisation of the accounts and audit, revenues to be in excess of $605 million (FY2021: $443 million) and underlying operating profit² to be in excess of $55.0 million (FY2021: $42.9 million).

Strong customer demand and organic revenue growth

Volex has continued to trade strongly, delivering robust organic revenue growth, including a significant contribution from the Electric Vehicles sector, where revenue has almost doubled. Demand has increased during the year with greater visibility of forward orders as customers look to secure manufacturing capacity.

Responding to supply chain challenges and disruption

The Group is managing global supply chain challenges effectively, responding dynamically to meet customer expectations. Working capital has increased due to the growth in sales, as well as investment in higher levels of inventory to maintain our position as a reliable partner to customers in an environment with extended supplier lead times and delays with global freight.

The Group is well positioned to navigate the challenges of a dynamic macro-environment, underpinned by its diverse markets, capabilities and global manufacturing footprint. These strengths have been central to the continued strong progress made by the Group, despite the challenges posed by Covid-19, the on-going disruption to supply chains globally and, more recently, the Russian invasion of Ukraine³.

Managing inflationary cost pressure

In a global inflationary environment, our ability to pass through increased costs to customers, protecting profitability while maintaining competitiveness, has been important.  Our global teams have deep relationships with customers, enabling efficient and regular mechanisms to modify costs as required.

Investing in growth

As planned, during the year we have made strategic, targeted investment in production facilities, equipment, IT and people to support our long-term growth objectives. The strategic diversification achieved in recent years has positioned the Group well, with capital investment supporting organic revenue initiatives and vertical integration opportunities in growth areas.

We completed four acquisitions during the year⁴.  These have enhanced our capabilities, creating additional opportunities in attractive market sectors while expanding our global manufacturing footprint.  We are focused on the delivery of benefits through the integration of our newly acquired businesses.

The Group continues to maintain a disciplined approach when assessing potential acquisition opportunities and enjoys a high degree of financial flexibility thanks to the new, enlarged debt facilities, secured in February 2022, which support Volex's ongoing growth plans.

Nat Rothschild, Executive Chairman said, "We have delivered an excellent performance in a challenging environment and are now well ahead of the five year plan we set out in October 2019. This is a validation of an effective strategy which has created a resilient and diversified business. We continue to pursue a number of exciting organic growth opportunities, while successfully acquiring and integrating compelling acquisitions, leaving us well placed for the future."

- Ends -

For further information please contact:

Volex plc
[phone], [e-mail]
Nat Rothschild, Executive Chairman
Jon Boaden, Chief Financial Officer
Julian Wais, Head of Investor Relations

Singer Capital Markets - Nominated Adviser & Joint Broker
[phone]
Shaun Dobson
George Tzimas

HSBC Bank plc - Joint Broker   
[phone]
Simon Alexander 
Joe Weaving 

Powerscourt - Media Enquiries
[phone]
James White 
Maxim Hibbs

Notes:

1. The Company has compiled forecasts from four analysts with current market forecasts for the 52 weeks ending 3 April 2022 for revenue to be in the range of $575.0m to $586.3m, with a consensus of $581.2m, and for underlying operating profit to be in the range of $53.8m to $54.6m, with a consensus of $54.2m.

2. Underlying operating profit is before adjusting items which are one-off in nature and significant (such as restructuring costs, impairment charges or acquisition-related costs), the amortisation and impairment of acquired intangible assets and share-based payment charges. This trading update is based upon unaudited management accounts information. Forward-looking statements have been made by the Directors in good faith using information available up until the date that they approved this statement. Forward-looking statements should be regarded with caution because of the inherent uncertainties in economic trends and business risks.

3.  Our direct operational exposure to Russia and Ukraine is low. We have no companies, facilities or employees in either country. In the most recent financial year ended 3 April 2022, sales to Russia represented less than 0.5% of Group revenue, with revenue into Ukraine being negligible. We have no significant dependency on direct supplies of components or materials from either Russia or Ukraine.

4. The following acquisitions were completed during the year:

· Irvine Electronics, Inc (US) for total cash consideration of $16.4m - October 2021;

· Prodamex SA de CV (Mexico) and Terminal & Cable TC Inc. (Canada) for combined total cash consideration of CAD$22.5m ($17.8m) - January 2022; and

· inYantra Technologies Pvt Ltd (India) for 51% majority equity investment ($8.0m) and 13.5 acres of industrial land and property ($5.0m) - the equity investment completed in March 2022 with the land and property purchase expected to complete in the first quarter of FY2023.

 

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